OPERATIONS

Study: Retailers experiencing e-fulfillment growing pains

BY Deena M. Amato-McCoy

Retailers are thrilled with their surging online sales, however the same can’t be said for associated fulfillment operations.

Business is booming online as sales across 82% of e-commerce and multichannel businesses increased in 2016. Only 6% reported a decrease in orders. While many voiced concerns over increasing competition, Brexit and currency fluctuations, the majority of companies (88%) expected a further increase in e-commerce orders during 2017.

This was according to “The 2017 E-Commerce Fulfillment Report,” from Peoplevox, a warehouse management system (WMS) provider. The report is based on 154 respondents from a variety of countries, including the United Kingdom, Ireland and the United States. Participants work for multichannel retailers; online only, or marketplace resellers.

Despite such positive results and an upbeat outlook for 2017, only 53% of respondents said they were happy with their fulfillment and warehouse operations. Purchasing and forecasting was their most common challenge overall, with almost a quarter (24%) saying this one area required the most improvement in 2017.

A majority of businesses (63%) admitted to not always shipping on time with 34% blaming unavailable stock for the hiccup. When it comes to rectifying shipping errors, the majority (80%) said that additional carriage, customer service and warehouse labor expenses as an inevitable cost of order fulfillment. Only one in five admitted to not knowing the cost of shipping mistakes.

A majority (78%) of businesses also found meeting the additional demand for orders at peak times an ongoing challenge in 2016, with just over half (52%) resorting to hiring temporary staff. Paying overtime to existing staff and pulling in staff from other parts of the business were other common solutions.

“While it is encouraging to see so many survey respondents reporting continuing sales growth, which is broadly in line with figures for the online retailing sector as a whole, our report has identified a number of growing pains,” said Jonathan Bellwood, founder and CEO, Peoplevox.

“In this super-competitive era of e-commerce fulfillment, retailers can no longer afford to paper over the cracks,” he added. “With expectations of next day/same day delivery, customers just won’t accept the apparent inability of online businesses to accurately ship on time, every time, or inadvertently sell items that just aren’t available.”

While 62% of respondents said their business used a WMS to improve operations. Specific business challenges or key IT events impacting retailers’ decisions to invest in a dedicated WMS platform, one of the most popular was an increase in picking errors (40%). Other common reasons included sales growth, warehouse expansion, or the implementation of new e-commerce platforms or ERP systems. Just over 10% said poor online ratings had also inspired a move towards implementing a WMS.

However, 70% of those that don’t use a WMS, ‘will not’ or ‘may not’ implement one in 2017 citing reasons such as complexity, unclear benefits, or believing their business just isn’t ready. A significant minority (30%) said they still rely on their ERP/e-commerce platform for managing the basics of warehouse management.

“These fundamental warehouse and fulfillment issues need to be addressed before they grow into more serious problems that may risk customer loyalty, cause increases in the number of returns, fail to maximize available sales opportunities, and escalate avoidable overheads,” Bellwood said. “For those still without or delaying investment in the latest technology, the availability of affordable, fit for purpose e-commerce fulfillment solutions now makes it easier than ever to equip their warehouses with the tools necessary for maximizing productivity, accuracy and profitability.”

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OPERATIONS

Holiday shipping to get more expensive: UPS to charge extra during peak times

BY CSA STAFF

For the first time ever, UPS is going to add a surcharge for orders delivered to homes during peak holiday times.

The surcharges, which apply only to residential deliveries, could boost the buy-online-pickup-in-stores (BOPIS) strategy deployed by many store-based retailers. The move comes as the shipping giant look to combat its escalating costs, which include increased investments in hiring, in the wake of the shipping boom caused by rising online package volumes.

The holiday price increases include a 27 cent surcharge per package on UPS' ground service from Nov. 19 to Dec. 2, and from Dec. 17 and Dec. 23. Residential packages, large packages and those exceeding system weight limits, would face surcharges of up to 97 cents for two-day air services to residential addresses from Dec. 17-23. (A chart detailing the surcharges is at end of story.)

“We’re focused on helping our customers achieve success during some of their most important selling seasons,” said Alan Gershenhorn, UPS chief commercial officer. “To meet their requirements, UPS flexes its delivery network to process near double our already massive regular daily volume, and that creates exceptional demands.”

During the 2016 holiday season, UPS' average daily volume exceeded 30 million packages on more than half of the available shipping days. In contrast, on an average non-peak day, the company ships more than 19 million packages. UPS said it hired about 95,000 seasonal employees during the peak shipping period.

“Our goal is to help every customer obtain the delivery capacity they need, combined with predictable and timely service they count on from UPS, even when there is limited capacity in the UPS network.” Gershenhorn said.

The company’s new per-piece peak charge* for the U.S. 48 contiguous states and intrastate Alaska and Hawaii** for applicable package types and periods is summarized in this chart***:

Nov 19 toNov 25 Nov 26 to Dec 2 Dec 3 to Dec 9 Dec 10 to Dec 16 Dec 17 to Dec 23

UPS Next Day Air®

Residential

n/a n/a n/a n/a $0.81

UPS 2nd Day Air®

Residential

n/a n/a n/a n/a $0.97

3 Day Select®

Residential

n/a n/a n/a n/a $0.97
Ground

Residential

$0.27 $0.27 n/a n/a $0.27

n/a = no additional charge during this period

* Peak Surcharge to be published Sept 1, 2017 in a revised version of the UPS U.S. Rate & Service Guide

** For packages to and from Alaska and Hawaii, the surcharge is posted on ups.com/rates

***Chart does not show all potentially applicable peak surcharges. Visit ups.com/rates for more detailed information.

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OPERATIONS

Teen apparel retailer caught in security breach

BY Deena M. Amato-McCoy

The Buckle is the latest cyber-crime target.

The teen apparel retailer was alerted that some guest credit card information was pilfered following purchases made at some of its retail stores. The chain launched a thorough investigation, which revealed that store payment data systems were infected with a form of malicious code, which was quickly removed.

The malware, which was found on certain point-of-sale (POS) systems, was designed to record payment card data — including account number, account holder’s name, and expiration date — from cards used in the manipulated devices. The Buckle believes that certain cards used in its stores between October 28, 2016 and April 14, 2017 may have been affected.

The Buckle promptly engaged forensic experts who performed a detailed investigation. Connections between The Buckle’s network and potentially malicious external IP addresses were blocked, potentially compromised systems were isolated, and malware-related files were removed.

The chain also believes that the malware did not collect data from all transactions or all POS systems for each day within that time period, according to the company. The forensics investigation also revealed that no social security numbers, email addresses or physical addresses were obtained by the criminals. There is also no evidence that The Buckle’s website or online guests were impacted, according to the company.

“All Buckle stores had EMV ‘chip card’ technology enabled during the time that the incident occurred and we believe the exposure of cardholder data that can be used to create counterfeit cards is limited. However, it is possible that certain credit card numbers may have been compromised,” The Buckle reported.

The chain continues to work with card brands and forensic investigation services, and any affected individuals either will receive communications from their issuing banks with additional instructions and/or replacement cards. Shoppers are also urged to closely monitor their payment card account statements, and immediately report any unauthorized changes to their banks, according to the retailer.

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